Featured Company / Smartcool Systems Inc.
Smartcool Systems Inc.
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Information as of
June 05, 2018
There is no doubt that energy efficiency for air conditioning, heat pumps and refrigeration units has gotten better over that last few decades thanks to new technologies. While some companies are making strides with hardware and refrigerants, Smartcool Systems Inc. (TSX-Venture:SSC) (OTCPK:SSCFF) is offering a proven software solution that can save an average of 20 percent of the energy used by the compressors in a variety of systems. The cost reduction can be measured and calculated to the dollar, with the payment for the Smartcool system made from the savings, giving companies of all sizes no excuses for not installing the system.
Wired between the compressor and thermostat, Smartcool technology is all about using algorithms to control the compressor, starting it at the top of a band and stopping it at the bottom. The algorithms further turn off the compressor mid-cycle dependent upon dynamic demand, resulting in superior performance. The retrofit Smartcool products work on virtually every make and size of HVAC (heating, ventilation and air condition) system, commercial refrigeration system and Heat Pumps.
Smartcool says in its corporate presentation that the technology has been installed in over 30,000 locations over the last 20 years. The Smartcool products bag includes the ECO3, ESM and, most recently, ECOHome, systems that can reduce that amount of energy consumption by compressors up to 40 percent, whether in industrial, commercial or residential applications.
Some of the most well known brands in the world are Smartcool customers, including Radisson Hotels and Resorts, 7-Eleven, General Electric and Jaguar, to name a few.
A recent installation at Sandford Springs Golf Club & Hotel in Kingsclere, Reading, U.K. resulted in an instant 31% reduction in energy consumption, paving the way for the owner, the Leaderboard Group, to install Smartcool technology at its Oxfordshire and Dale Hill golf resorts. In March, Smartcool partnered with Cool Save Limited to lead all sales activity in England, a move that will continue to build the company’s brand in a region where it already has a solid footprint.
A similar domino sales effect happened last month at Apogee Condominiums managed by Atlantic Pacific Companies. After installing Smartcool technologies on the five heat pumps controlling the temperature at common areas at Apogee Beach Condominiums, Atlantic Pacific decided to have the energy efficient technology installed on all 90 heat pumps servicing all 49 exclusive beachfront residences at Apogee Beach.
It also speaks volumes as to potential future income for Smartcool considering Apogee Beach is just one of more than 50 condominium associations managed by Atlantic Pacific.
Customers can get a clear view of the exact savings due to a partnership between Panoramic Power and Smartcool. Panoramic’s technology details the power savings of compressors, allowing Smartcool to inform clients precisely as to savings on kilowatts per hour used. Monitoring the power savings allows Smartcool to provide a finance option for the client to pay for the new system from the savings, meaning there is no capital budget necessary to add the Smartcool system.
There are many potential new sales catalysts on the horizon for Smartcool, including those in the cryptocurrency, blockchain and cannabis arenas. In January, Smartcool installed a system at SSE’s Data Center in Hampshire, U.K. The largest expense for data centers, especially those involved in cryptocurrency, is energy consumption, with monthly bills sometimes rising into seven figures. Massive greenhouses are being constructed for indoor growing of cannabis to supply multi-billion-dollar North American markets. Both industries use a tremendous amount of energy to keep their systems cooled. Any means possible for companies to slash their monthly energy bill is not just up for consideration, it is something management is actively seeking.
As Vancouver-based Smartcool makes its push into the residential markets, it has brought on some big-name help to spread the word. Contractor Mike Holmes, made famous as host of the popular television shows “Holmes on Homes,” “Holmes Makes It Right” and others, has come on as the brand ambassador for ECOHome now that Smartcool has launched its first product directed towards a homeowner. Holmes, who is known for his uncompromising views on quality, is endorsing the product for its ability to save people money while reducing carbon emissions. A marketing blitz featuring Holmes in select U.S. sunbelt states is getting underway to get the brand in front of millions of potential customers.
Smartcool is also growing inorganically, penning a letter of intent contemplating the acquisition of Total Energy Concepts (TEC), a merger that would broaden the offerings of Smartcool significantly. This isn’t a marriage of strangers, as Minnesota-based TEC is a current distributor of Smartcool products. More broadly, TEC has a holistic approach to energy savings, selling an array of products and services, including LED lighting, power quality and protection strategies and intelligent motor and facility controls, to customers ranging from convenience stores to Fortune 500 companies through its staff of 14+ representatives.
This will make for a formidable sales force that includes Smartcool’s existing teams and reseller agreements with large electrical supply firms like Rexel, Edmundson and Matrix.
Details on TEC in the news release of the LOI were scant, but Smartcool did say that the company has “generated significant sales and profitability” across its 15 years in business, which has to be music to the ears of Smartcool investors. These investors include a large stake by management, with insiders holding about 190 million of the 306 million fully diluted shares.
In 2017, revenue at Smartcool climbed 137.5% from 2016 to C$774,279. That revenue growth rate continued to accelerate with the company announcing in early-June 265% revenue growth from Q1, 2017 to Q1, 2018. Adding in TEC to the mix combined with what appears to be a strong start to 2018 could be just the recipe to catapult Smartcool upward from its current price tag around only a nickel per share.
Forward Looking Statements
This report includes forward-looking statements that reflect current expectations about its future results, performance, prospects and opportunities. Smartcool Systems Inc. has tried to identify these forward-looking statements by using words and phrases such as "may," "will," "expects," "anticipates," "believes," "intends," "estimates," "plan," "should," "typical," "preliminary," "we are confident" or similar expressions. These forward-looking statements are based on information currently available and are subject to a number of risks, uncertainties and other factors that could cause Smartcool Systems Inc.'s actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. These risks, uncertainties and other factors include, without limitation, the Company's growth expectations and ongoing funding requirements, and specifically, the Company's growth prospects with scalable customers, and those outlined above. Other risks include the Company's limited operating history, the Company's history of operating losses, consumers' acceptance, the Company's use of licensed technologies, risk of increased competition, the potential need for additional financing, the terms and conditions of any financing that is consummated, the limited trading market for the Company's securities, the possible volatility of the Company's stock price, the concentration of ownership, and the potential fluctuation in the Company's operating results.
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